Examination of Witnesses (Questions 40-59)
BILL RAMMELL,
MP AND SIR
HOWARD NEWBY
2 NOVEMBER 2005
Q40 Mr Newmark: Minister, in February
of this year Sir Howard said that in some parts of the country
good-quality degree schemes in science subjects were not very
thick on the ground. Do you think this is a problem?
Bill Rammell: Where that is the
case, arguably it is. I think it comes back to the point that
you need to be stimulating demand to ensure that institutions
can respond to that demand. Overall there has been an increase
of quality, but we need to keep monitoring that to ensure that
it continues.
Sir Howard Newby: Can I come in
on this, because I still hold to that position, I have to say.
It is for that reason that now we have the Secretary of State's
response to our advice that we will want to work very speedily
and very hard to see what can be done about that problem. I can
say that we have been opening up discussions with the Open University
to create a national grid of learning, which might provide the
kind of high-quality teaching provision in all parts of the country,
including those where students might like geographical access
to courses that we are concerned about. We are looking to possibly
pilot this in the field of chemistry and modern languages. We
have not yet reached agreement with the Open University but we
would like to see what could be done, and perhaps with the Open
University in collaboration with other higher education institutions,
providing a kind of ubiquitous access route for students, wherever
they live, rather than relying on accidents of geography, which
can be a bit of a problem at the moment.
Q41 Mr Newmark: Studies such as the
Dearing Report suggest and Lambert Review argue that regional
links between universities and business strengthen the economy
and that high-tech "clusters" benefit from a local supply
of STEM graduates. Do you see these arguments as a convincing
reason for maintaining a good regional spread of STEM provision
or are current levels of social mobility sufficient to meet these
demands?
Bill Rammell: High-tech clusters
are very significant in driving regional economic development
within this country. There is very interesting work being done
on the role of universities in leading the kind of city region
phenomenon that we are talking about across government; and, clearly,
to enable that to happen you do need a good supply of STEM graduates.
The kind that Howard has been talking about with the Open University
will help in that regard. I also think you can overstate the degree
to which the graduates that you need will have to come from the
locality. There still is significant mobility in terms of where
a student comes from, where they study, and where they end up
working in their first job. Frankly, that is a good thing; it
enables people to do cross-fertilising and move across the country.
Sir Howard Newby: I agree with
the point you are making in your question; I simply extend it
to a wider group of graduates than just STEM graduates. I think
there are other clusters of disciplines which can have an equally
important effect. We should take the impact of higher education
on local and regional regeneration very seriously. There is some
evidence to demonstrate that if you can attract graduates into
an area, they tend to hang around and have the kind of stimulation
effect that you describe.
Bill Rammell: In terms of mobility,
we can have a great debate about the new variable fee system and
student financial support system; however, I think it is very
clearly the case that the new system of student financial support
is a better deal for students than the existing one and will enable
the kind of mobility we are talking about to better take place.
Q42 Chairman: I cannot really let
you get away with that!
Bill Rammell: I did not think
you would.
Q43 Chairman: Heavens above! You
actually think that next year when you are charging students £9,000—and
they are going to have very, very significant additional costs
in terms of their accommodation with an estimate by Barclays Bank
of £33,000-35,000 at the end of the three years—that
that is not going to affect mobility? That is not credible.
Bill Rammell: I was comparing
the existing system to the new system, and I have said this publicly
on a number of occasions. I think there were two principal things
we got wrong with the introduction of tuition fees in 1998. One
was asking the students to pay before they went to university,
and secondly with the abolition of student grants. Both of those
issues are being rectified. If we can get the facts across to
young people, the fact that you will not start repaying a penny
until you are in work and earning more than £15,000 a year,
and then you will be paying as little as £5.19 a week—and,
frankly, most graduates starting work on about £18,000 a
year are probably spending more than that on CDs a week than they
are on paying back some of the money. It becomes a much better
deal, a much more manageable deal. Interestingly, there are all
sorts of individual financial lenders, who have said an awful
lot of things; and frankly a lot of them have got vested interests
in saying those kinds of things. I was very struck by a statement
that the Council of Mortgage Lenders made recently, saying that
they will make their judgment about what money they lend to a
student, not on the basis of their overall debt, but their weekly
outgoings as a proportion of their income; and the outgoings under
the new system are less than they are under the existing one.
In that context, I think it will make mobility. I am sure you
will not agree.
Chairman: Now is not the place. I am
sorry, Brooks, but I just had to put something on the record.
Q44 Mr Newmark: Your point addressed
the second part of my question. The only point on my first question
is that, having spent six years in Cambridge, Massachusetts and
seen the benefits of the link between business and students and
building up the high-tech corridor along Route 28, it has tremendous
benefits in attracting students to areas and seeing them benefit
financially from their education.
Sir Howard Newby: I agree with
that, and that is why, as a funding council, we have become aware
over the last year or more now that we need to do much more to
stimulate and incentivise universities to take on a transfer activity,
even more seriously than they do.
Q45 Adam Afriyie: My first question
is to Bill. Should the Government prop up ailing science departments
of any description, and, if so, under what circumstances and in
what way?
Bill Rammell: It depends what
you mean by "prop up". I am not saying that there should
be a carte blanche or an open cheque to any institution that is
failing to recruit sufficient numbers of students to say that
the Government will step in and intervene in those circumstances.
Frankly, if you gave that kind of open-ended blanket commitment
I do not think you would be getting value for money. However,
we are asking HEFCE to intervene early with vice chancellors to
create this kind of regional swap-shop approach where they look
at problems that might be experienced. Although I cannot give
a cast-iron commitment on what financial support HEFCE would be
able to deliver, if you look at the evidence that HEFCE gave to
the Secretary of State there were a number of case studies of
where HEFCE had intervened at an early stage and provided financial
support to institutions. I think that is the appropriate kind
of intervention.
Q46 Adam Afriyie: Do you have a set
policy on how and when you intervene? What would you consider
to be an ailing science department?
Bill Rammell: There are not hard
and fast rules in these circumstances, because it is too complicated
for that, but it will be triggered by an institution saying in
confidence to HEFCE, "we have a particular problem and think
we are running into difficulties". HEFCE will then sit down
and analyse with that department and that university, and with
surrounding partners, if that is possible, to see if there is
a way of managing provision either so that it continues or it
does it on a co-operative basis. For example, we might be looking
at the Scottish experience, where because of the high level of
costs involved in STEM subjects there is some collaboration across
institutions.
Q47 Adam Afriyie: Sir Howard, obviously
you are there to implement these interventions. At one point you
mentioned it was on a case-by-case basis, which is what the Minister
has just said. But if you are also concerned about the autonomy
of higher education institutions and science departments, how
do you intervene and when do you intervene? Do you just sit back
and wait for these departments to get in contact with you, as
the Minister has just suggested, when they are in desperate need?
Sir Howard Newby: We have a long
history, as the Minister said, of making these interventions in
a rather low-key way, because often that is what leads to effective
and successful outcomes. We have also to remind the Committee
that for many years we have supported what we have called minority
subjects, where we accept that there is a need to sustain national
capacity, even in the absence of sufficient students studying
the subject and making it economically viable. We have not really
got on to supply-side interventions in our conversation but we
will continue to do that as well. We receive regular reports from
universities in terms of their financial health and their strategic
planning, which they have an obligation to send us in terms of
their annual monitoring statements, which are statements about
their various activities. It is through that and through our regional
teams that we quite quickly, frankly, pick up early intelligence
about where a particular department or a particular institution
is becoming vulnerable. That is why we wanted to insert the word
"vulnerability" into the notion of "important"
subjects.
Q48 Adam Afriyie: Can you give us
an example of what factors you are looking at; and then say how
you would go about intervening precisely?
Sir Howard Newby: Vulnerability
could come from trends in student demand for a particular department,
which we would pick up in the normal way through the university's
returns and would lead us through our normal round of discussions
with the university to say, "We have noticed that you have
a declining number in heraldic studies; are you concerned about
the future of heraldic studies in your university?" That
would normally lead to—
Q49 Chairman: Or mediaeval studies!
Sir Howard Newby: Indeed. That
would led to some confidential discussions between the university
and ourselves about how they can turn this around, and we would
see what we could do to help. It could also come through a university
department losing a significant number of staff simultaneously,
which has left that department very vulnerable. At least one of
the chemistry department closures in recent months, which achieved
a lot of headlines, came about through that process. If it helps,
since the whole issue came up we have kept our ear fairly closely
to the ground with universities, and there are now one or two
but no more instances which we are keeping a very close eye on,
where we do not expect any imminent announcements. Now we have
the Secretary of State's response, we might well want to follow
up some discussions with those one or two institutions to discuss
with them their future strategy for those particular departments
that certainly look ostensibly from the outside rather vulnerable.
Q50 Adam Afriyie: I am still not
entirely clear about the dividing line between autonomy for a
university and then your intervention on the other hand.
Sir Howard Newby: The honest answer
is that there is not a clear dividing line. I have said to this
Committee before that whilst we must respect the autonomy and
independence of our institutions, because that is what has made
our education system such high quality by world standards, it
is nevertheless the case—and vice chancellors understand
this—that the individual interests of 130 independent HEIs
in England do not necessarily add up to an overall national interest.
They have always understood that, hence our intervention on what
I called "special subjects" earlier. Even now we are
intervening on the supply side in various niche areas of science
with the research councils. We are putting in support for chemical
engineering. We are putting in support to ensure that the statistics
research is healthier. More proposals will be coming forward over
the next year. It depends, first, on our having good intelligence,
and secondly on having the trust of vice chancellors to have an
open and frank dialogue with them at an early stage; and thirdly
to intervene in ways which are effective but which nevertheless
recognise and respect in the end the judgments of senior managements
in our universities.
Q51 Chairman: Do you involve the
learned societies in that respect? I am finding difficulty in
getting a handle on how you get this intelligence together. It
seems to be a mystifying process. You sit in a darkened room,
do you?
Sir Howard Newby: That is why
I used the word "intelligence", Chairman; it is not
just looking at quantitative measures, but it is also holding
conversations, as we do from time to time with all universities
and HEIs, about their immediate and longer-term futures. It is
a mixture of soft and hard information. We do involve the learned
societies in that from time to time, although I have to be a little
careful here: the learned societies do not always see eye to eye
with the senior managements of universities in each and every
case at least. We certainly take their views into account.
Bill Rammell: It is also worth
saying, Chairman, to take the implication of your question, that
this is not a process that you necessarily broadcast from the
rooftops because if you did, you would are you the real risk of
self-fulfilling prophesy that lecturers, support staff and indeed
students vote both with their feet and make a potentially vulnerable
situation even worse.
Q52 Chairman: I am finding it very
difficult to get the connection between the economy and the demand
that it is making and how you then interface with the universities
in order to make sure that that demand is met, and that you maintain
a level of provision that is appropriate. That is very difficult
to understand.
Sir Howard Newby: It is difficult,
and we all share the difficulty. We do have to steer this line,
which is not a clear line, between respecting autonomy of institutions
on the one hand, and respecting that there is a national interest
that needs to be secured in the end on the other. Frankly, I can
only say that it is a judgment call, if I am perfectly honest
with you. Whether and how we should intervene in particular circumstances
in a particular university in a particular part of the country
in a particular subject comes down to a judgment call by both
myself and my colleagues at the Funding Council and the senior
management and governing bodies of the universities.
Chairman: We might return to that at
some future date.
Q53 Dr Iddon: Can I look at the question
of international students and their role in British universities,
Sir Howard. We are told that 15 universities rely on overseas
students for more than 15% of their income. Do you think you ought
to encourage not only those universities but also the others to
top up their income from this Government and other sources by
attracting more foreign students?
Sir Howard Newby: I think the
fact that so many foreign students come to this country, and have
come in increasing numbers in recent years, is a real vote of
confidence in the British higher education system, and in principle
this is something that we should celebrate. It is one of the demonstrators
of the fact that we do have such a high-quality vibrant, dynamic
system that so many overseas students want to come here and share
in it. Let me say that straight away. It has all sorts of other
beneficial consequences, and I am not thinking of financial consequences
when I say that; it is concerning tolerance, multi-culturalism
and celebration of diversity. All of that is very welcome. Where
we get nervous, as a funding council, is where some institutions
might be becoming over-dependent on a volatile overseas student
market. Some of those institutions that you are referring to in
the quote I gave to the Education and Skills Select Committee
are institutions that are extremely strong financially with very
high academic reputations. In their cases, that figure does not
worry me, but there are some institutions on that list that are
much weaker financially and which would be very vulnerable to
any sudden downturns in the overseas student market. We are keeping
this situation very closely monitored in terms of the risks that
an over-dependence on overseas students might present to some
institutions. As I say, we judge that risk in relation to the
overall financial and indeed academic strengths of the organisation.
Overall, to have more overseas students in our universities is
a good thing.
Q54 Dr Iddon: Has your organisation
or any other organisation done any research to determine the future
of the foreign students that are educated here? Do the majority
of them return to their home countries, or do a substantial number
of them stay on to develop the British economy?
Sir Howard Newby: There has been
some work done on this on international mobility, not by us at
the Funding Council but by academic researchers, which shows that
whilst the majority do go back to their home countries, a significant
minority stay in the UK and contribute very substantially over
their lifetimes to the UK economy. Rather like we were saying
earlier about internal mobility within the UK, with students going
to university away from home, and as they graduate a significant
number of them tending to stay around and stimulate the local
economy as a result, this is also true on an international level.
Q55 Dr Iddon: I have a worry about
research and development exiting this country and going abroad.
There are rumours circulating at the moment in industry that another
pharmaceutical company might pull out of research and development,
because as you know some have already gone. If we are educating
foreign students to a very high level and they are returning to
their own country and we are not attracting enough STEM students
to study those important subjects in our own country, is this
not encouraging foreign industry in particular that is already
based in Britain just to transfer their operations to another
country?
Sir Howard Newby: That is indeed
a real danger. Increasingly, globally-organised research-intensive
multinational companies will continue to site their investments
in research and development not only where the overall economic
environment is one they can work in, but also where they can gain
access to the best talent. We have to make sure that we have more
than our fair share of the best talent here in this country.
Bill Rammell: In response to Dr
Iddon, I do think that it is two-way traffic. There are numbers
of overseas students who come here who then work in British industry.
Frankly, if you look at the longer-term trends, in order to maintain
the level of highly-qualified people we need to sustain our economic
viability, and we need those overseas students to come here. However,
we need to get the STEM debate into context. It is only about
6% of overseas students that are actually studying STEM subjects.
Sometimes, some of the discussions create the impression that
it is substantively more than that. Returning to your original
point about whether there is a vulnerability for those institutions
that recruit a high number of overseas students, one word of caution
that I would give is this. While I think it is a very positive
thing that we are getting those numbers of overseas students,
there is a danger of having all your eggs in one basket on a country-by-country
basis. To take an example, China is very current as a topic, and
there has been a 20% downturn this year in the number of Chinese
students coming to this country. The major reason is that the
Chinese Government has taken a strategic decision to grow more
of its students at home. There is nothing whatsoever that we or
any other country can do about that. If you are focusing exclusively
almost on one country, you do run that kind of risk; so in terms
of attracting overseas students it is far better to go for a broad
mix.
Q56 Adam Afriyie: Does the Government
have a limit on the maximum number of overseas students studying
here, both in terms of whether it is economically sensible, or
to be dependent in that way, but secondly in terms of the crowding
out of those science and technology places for British undergraduates?
Bill Rammell: First, there is
not a limit. Second—and this is a Daily Mail/Daily Express
issue that is in danger of completing misrepresenting the situation—they
do not crowd out British students. They actually add £5 billion
a year to British universities. If you want to look at it in global
terms, you could argue that they are subsidising British undergraduates
with the very substantial fees they pay by coming to this country.
I do think that it is in our education and cultural and business
interests that we get those overseas students coming to this country.
Q57 Adam Afriyie: But if the UK is
not able to meet its own needs for home-grown scientists, as a
Minister of Government, are you comfortable that we might need
to rely on overseas scientists to provide our needs here?
Bill Rammell: No, and that is
why this Government is doing an immense amount to stimulate demand,
particularly in STEM science subjects, from British students.
Even if we succeeded to our ultimate expectation, if you look
at the demographics and our economic need as a country, it is
in our material interests that on top of that expanded number
of British students you get some highly qualified overseas students
who contribute to our economic viability.
Q58 Adam Afriyie: Sir Howard, has
there been an example so far where overseas demand for a STEM
place in Britain has dropped off and has caused a problem in the
finance of a university or a science department?
Sir Howard Newby: Yes, there has
been. Certainly at departmental level and also the university
level, I can think of one or two universities' finances where
there has been a sharp deterioration because of the drop in overseas
student demand. That is what I was saying earlier; we monitor
these risks very closely.
Q59 Adam Afriyie: That is one of
those vulnerability factors.
Sir Howard Newby: It is indeed.
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